CH5: Budgets and Reserves Flashcards
What is an assessment p.101
The owners financial obligation to the CA during a given period of time (usually 1 year)
What is baseline funding p. 104
establishing a reserve funding goal of keeping the reserve cash balance above zero. Goal: Never purposefully running out of money or having special assessments. Note: reserve contributions and reserve balances are usually lower.
What is a budget? p.98
a financial plan for an organization that provides and estimate of CA’s revenue and expenses for a given period of time.
What are chart of accounts p.106
an organized list of titles, descriptions, and assigned numbers of all accounts in an organization’s general ledger.
What is discretionary budget line items? p.106
These are items based on owner, board, and committee desires - in consideration of values, lifestyle, level of service, etc.
What are expenses p.102
operating expenses are those items that occur on a regular basis.
What is FHA? p.99
Federal Housing Authority
What is FHLMC? p.99
Federal Home Loan Mortgage Corporation
What is FNMA? p.99
Federal National Mortgage Association
What is full funding? p.105
setting a reserve funding goal of attaining and maintaining reserves at or near 100% funded.
What is historical trend budgeting? p.107
assumption that existing line items are needed. Amount of funds allotted to each during current year is adjusted for expected changes in coming year.
What is mandatory budget line items? p.106
items based on community and owner needs. Requirements that the community is obligated to meet. i.e. taxes, repairs, utilize, and maintenance.
What are major improvement expenses? p.102
items that are not necessarily required but added ti improve and enhance the overall welfare, safety, and life of residents/community.
What is an operating budget? p.107
section of the budget devoted to operating activities includes operating expenses and major improvements but not the replacement fund.
What is operating expenses? p.102
items that occur on a regular basis
What is percent funded? p.104
measure relative size of the reserves by looking at how the fund measures up against the needs of association.
What is reconciliation of expenses and revenue? p.111
reconciling estimated expenses with your CA’s anticipated revenue.
What is a replacement fund? p.103
funds put aside in reserve for the replacement of major components of a community’s common property.
What is reserve cash flow statement? p.111
shows the amount to be funded and the amount to be expanded from the replacement fund over a given period of time.
What is reserve formula? p.111
A years budget line item is the result of current replacement cost - funds on hand, divided by remaining useful years of life.
What is a reserve specialist? p.110
designation program to help community managers and board members identify qualified reserve study providers.
What is a reserve study? p.108
a budget planning tool that considers the current status of the replacement fund and determines a stable and equitable funding plan to offset the anticipated future major common areas expenditures.
What is revenue? p.101
consists of the collective items or amounts of income which, in the case of a community association, are appropriated for public expenses.
What is a special assessment? p.101
a one-time assessment often voted on by owners to recover a major expense that was not included in the annual budget or replacement reserve.
What is threshold funding? p.105
keeping the reserve balance above a specified dollar or percent funded amount.
What is VA? p.99
Veterans administration
What is zero-base budgeting? p.107
all line items are set to zero and the amount of funds allotted to each must be justified.
